As inflation’s bite lingers and big box retailers dig themselves out of massive inventory gluts, Amazon’s latest earnings report looked like an anomaly. While the company recorded a 4% decline in its online sales, it clocked a 9% increase in revenue from third-party seller services (warehousing, packaging, and delivery).
In a deteriorating economic climate, nearly a million Netflix customers have canceled their subscriptions. Meanwhile, Amazon said its Prime membership revenue, which includes its video streaming service, surged 14% in the second quarter.
What to make of all this? Amazon, which benefited from the pandemic lockdown of 2020-2021 with its delivery service, is now benefiting from its role as the low-price leader. That would seem to be consistent with a recent survey by First Insight that found 80% of consumers have less confidence to spend. The overwhelming majority believe high prices will prevail for at least the next six to 18 months, and 79% believe we may already be in a recession, a number high enough to suggest a self-fulfilling prophecy.
Although inflation might be easing and jobs plentiful, the pain isn’t going away anytime soon. For the foreseeable future, pricing strategy will be retailers’ top concern and should be the focal point of customer research.
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